As you know, the insurance claims process can be complicated. Claims can be fraught with nuances that make a claim determination challenging and prolonged, and payouts may occur more slowly than you expect. This is normal in the insurance industry, but these circumstances can lead to a bad faith claim being levied against your company when a policyholder feels slighted. One of these claims can threaten the financial viability of your business and harm its reputation, which can have significant long-term implications for you company.
So, what are you to do? Build the best bad faith claim defense you can under the circumstances.
Your bad faith claim defenses
Depending on the circumstances of your case, you might have several defense options at your disposal. Let’s look at a few of them.
- Argue that the policy doesn’t cover the claim: Far too often, policyholders cry bad faith when really their claim was denied because it wasn’t covered under the policy in question. This is why engaging in a thorough investigation of the incident in question and carefully analyzing the policy at hand is critically important. There can be a lot of nuances here, so you’ll want to have a full understanding of how the policy in question will be assessed by the court.
- Argue that the insured individual isn’t entitled to coverage: Sometimes, claimants try to recover under a policy for a legitimate loss. However, the cause of the loss is unclear. For example, a car accident victim might have injuries that would be covered under the claim if suffered in a wreck, but hospital records created shortly after the accident don’t indicate any serious injuries. Here, an insurance company may be justified in denying a claim or delaying its payment for lack of evidence tying the injuries to the coverage policy.
- Disagreement over the value of the claim: Bad faith claims are often made when an insurance company fails to pay out the full claim amount. However, sometimes there are legitimate disagreements over the true extent of the claim and what should be covered under the policy in question. These disagreements, though they may lead to delay in payment and an underpayment in the eyes of the insured individual, are not bad faith.
- Disputes over how the claim was handled: In a lot of bad faith cases, insured individuals argue that their claims were mishandled by the insurance company, which led to unreasonable delays. However, sometimes claims that are handled properly are still subjected to delays. This is especially true when disagreements arise over needed medical treatment and further assessment of the loss in question. After all, thorough investigations, which tend to be necessary in these contexts, take time.
Gather the evidence you need to protect your interests
To adequately defend yourself against a bad faith claim, you need to have evidence that justifies the claim denial, underpayment of the claim, or delay in paying the claim amount. This means being proactive in speaking to investigators, adjusters, and other experts who can articulate why the insurance company acted the way it did.
We know that facing an insurance dispute can be complicated and stressful, especially when you’re facing the possibility of getting hit with a judgment and damage to your business’s reputation. That’s why you need to know the law and aggressively apply it to your set of circumstances. That may be easier said than done, which is why you may need to turn to help when dealing with your bad faith claim.